European export base oil prices decrease as year-end looms

LONDON (ICIS)--Export prices in the European base oil market have decreased this week as certain producers look to optimise inventories ahead of the year’s end, traders said on Tuesday.

European base oil producers have long held out against offering prices below the ICIS ranges because of narrow production margins, despite persistently sluggish demand.

Indeed, the market has been in a stalemate for much of the past two or three months, with buyers refusing to pay the prices on offer and producers resisting the pressure to offer discounts.

Traders suggested that some producers, particularly those in northwest Europe, appear to have higher inventories than previously assumed, and with the end of the year approaching, have accepted they may have to lower prices to shift stock.

Market participants often try to reduce stock levels before the end of the year, so as to enter to the new year with low working capital.

“It seems some producers will try to optimise their stock,” said a trader.

While some producers continue to resist, two deals were heard this week at discounts, while other offers were heard at similarly low prices.

Export prices were this week assessed at $940-960/tonne (€696-710/tonne) FOB for SN150, $970-990/tonne FOB for SN500 and $1,105-1,140/tonne FOB for brightstock, all down by $40/tonne.